China has taken a significant leap towards strengthening its commitment to carbon neutrality by reviving its voluntary greenhouse gas (GHG) emission reduction trading market. This move comes after a six-year hiatus following the suspension of China Certified Emission Reduction (CCER) registration in 2017.
The Ministry of Ecology and Environment, in collaboration with the State Administration for Market Regulation, released the Management Measures for Voluntary Greenhouse Gas Emission Reduction Trading (Trial) on Oct 19, bringing the market back to life.
This revival not only marks a bold step towards carbon neutrality but also signals China’s commitment to accelerating its transition to a greener, low-carbon economy.
Emphasizing the voluntary approach
At the heart of these management measures is the concept of “voluntary” GHG emission reduction trading. The central idea is that entities, both corporate and individual, willingly embark on projects aimed at reducing GHG emissions.
After rigorous quantification and verification following scientific standards, these projects can be registered in the market, where they earn revenue in exchange for their contribution to emission reduction.
This approach fosters a sense of shared responsibility and inclusivity among participants, promoting engagement across industries and society at large.
Key takeaways from the management measures
-Unified regulatory body
One of the notable changes introduced by the Measures is the establishment of a unified national registration and trading system. In contrast to the previous system, which involved multiple decentralized trading agencies, this centralized approach ensures consistency and transparency throughout the process. Moreover, it brings third-party verification organizations, known as Designated Operational Entities (DOEs), under government supervision.
However, a significant stipulation is that project owners cannot commission the same verification organization responsible for project verification to conduct emission reduction quantity verification for the same project, maintaining impartiality.
-Project timeline and emission reduction validity period
The Measures provide clear guidelines regarding project timelines and the validity period for emission reductions. According to this document, projects seeking verification and registration must have been initiated on or after Nov 18, 2012, while emission reductions eligible for verification and registration must have occurred after Sept 22, 2020.
The system allows emission reduction projects to register their emission reduction quantity in stages, but each registered reduction must have occurred within the five years preceding its registration date. In essence, emission reductions must be registered within five years of their occurrence to remain valid.
-Handling existing projects and emission reductions
For projects established before March 14, 2017, the Measures require them to reapply for registration under the new provisions. However, previously issued CCERs can continue to be traded, ensuring the continuity of trading for businesses.
-Clearer responsibilities for private participants
The Measures replace the previous record-keeping system for projects and emission reductions with a dual-commitment mechanism.
Project owners and third-party verification and auditing organizations pledge the authenticity and compliance of project and emission reduction materials. Government supervision and inspection are integral to ensuring accountability.
Furthermore, these measures place a strong emphasis on transparency and disclosure. Documents related to GHG emission reduction projects, their registration status, cancellation status, project verification reports, emission reduction quantity verification reports, and data retention periods will be made public. This heightened transparency enhances the credibility of the system and lays the foundation for market growth